CHICAGO — Northern Trust Global Investments will create a series of global, European, and Japanese enhanced index products as it continues to beef up its 12-person quantitative management team.
In the past six months, NTGI has hired several quantitative researchers and portfolio managers, all of whom were formerly with Barclays Global Investors, San Francisco: Chad Rakvin, a quantitative portfolio manager at BGI, was hired last month as a quant portfolio manager; in September, the firm hired Steve Schoenfeld, who left BGI over a year ago, and Robert Ginis, a former BGI quantitative researcher, who also left the firm over a year, to work in its San Francisco office; and earlier this month, NTGI hired Kelly Young as a quantitative portfolio manager in BGI's London office. All four will focus on expanding BGI's enhanced index strategies lineup.
Tom Taggart, a BGI spokesman, said "It's not unusual for someone who's trying to build that business to look at places where there's expertise. But this is not a flood of people who have left. We have hundreds of people in our quantitative teams."
Jeremy Baskin, NTGI's global head of enhanced index and quantitative research, added that the firm would seek to hire at least two more quantitative research professionals, and would hire additional quants on an opportunistic basis over the next year.
Kevin Rochford, NTGI's managing director of global sales and client service, said the firm is currently focused on building its enhanced index lineup. "That's our first and foremost priority," he said. "We're looking at introducing global enhanced large-cap and small-cap index products. Then we'll see what we can do outside the U.S. We're looking at European and Japanese enhanced index products as well, in addition to global small cap. Those strategies are being either designed or implemented now."
The firm currently manages about $4 billion in enhanced index accounts, almost all of which is from institutions. The new quantitative strategies are being added because of institutional client demand and to improve the enhanced index capabilities the firm added when it acquired Deutsche Bank's passive management business in 2002, said Mr. Rochford. "More clients are exploring and are committed to placing large pools of money in quantitative portfolios, and then getting alpha through pouring money into non-traditional vehicles such as hedge funds and private equity funds."
Mr. Baskin said the move toward quant management also has been bolstered as the markets continue to be stagnant and excess returns become more difficult to attain. "More active managers are thinking about adding quantitative strategies (for the above reasons). There is a reasonable degree of efficiency in the markets," he said. "That puts a premium on innovation and new models. It also puts pressure on (money managers) because the details of implementing new and existing strategies becomes that much more important."